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The Obama's plan to help troubled Americans

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By : John Smith    99 or more times read
Obama’s bold plan to help troubled Americans keep their homes by temporarily reducing their mortgage payments has a second string to bring relief to underwater borrowers.

But will this work in practice?

This is what is uppermost in the minds of local housing counselors, who say the situation is getting worse while lenders drag their heels and slow down on the modified mortgages provided for under Obama’s HAMP.

Last Friday Washington announced that Americans that are currently under unemployment benefits would see their monthly payments fall to no more than 31% of their income for between 3 and 6 months, and that they could then make application to cement this arrangement for the duration of their mortgage.

“Provided that they remember to apply within the first 90 days of their delinquency, this will provide welcome relief,” says Director of Homeownership Services at Neighborhood Housing Services, Chicago Michael van Zalingen. “Half our clients are having difficulty servicing their debt since becoming unemployed and this bridges a deficiency in HAMP.

“But,” he adds, “and this is a big but, what about the people who’ve been out of work for longer? Six months may also be insufficient time for some, like those who are out of work for factors beyond their control such as poor health?”

Chicago’s unemployment currently stands at 11.6%. Moreover almost 25% of mortgages are underwater according to 2009 4th quarter data released by First American CoreLogic Inc. This confirms an earlier RealtyTrac report that stated that Chicago foreclosure filings during 2009 went up 33% from the previous year.

“The Government is trying its best, and I don’t want to discredit any of the options” says Brian White, Executive Director of Lakeside Community Development Group (an agency that counsels Chicago home owners). “What’s still missing is a mandatory program that obliges lenders to join the party without leaving any squirm room. We’ve got months of data that proves conclusively that voluntary measures are just not getting the job done.”

The plain truth is that nationwide just 170,000 of the homeowners who enquired about HAMP have completed the process. Moreover only a small fraction of lenders have availed themselves of the $75 billion of Federal largess available.

This can’t be on account of lack of interest on the part of borrowers, so what’s the problem? It’s beginning to sound that Brian White is right, and that the big banks need a firm push in Obama’s direction.

Whatever the real reason for problem, surely its time for Obama to wade into the water, kick butt or whatever else is necessary, and turns his inspiration into a reality that works for ordinary Americans?
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